Brussels throws lifeline to stricken 3G
By Daniel Dombey in Brussels
Published: August 25 2002 21:56 | Last Updated: August 25 2002 21:56
<COMMENTS: Even my six and half year old daughter knew, from the onset, this was necessary. But it took all those losses taken by shareholders of, both, operators and vendors for Brussels to say: "Yes, there is no room for three 3G operators in any country in the world."
Why is Bruseel doing an about face now? Because WLAN is starting to get credibility and will threaten 3G!>
Struggling mobile phone companies will be thrown a lifeline by Brussels after competition regulators backed plans for increased co-operation between third-generation networks.
In the next few days, the European Commission is to announce its support for an agreement to share the costs of building new 3G infrastructure in Britain. Clearance for a deal between T-Mobile, the Deutsche Telekom subsidiary, and MMO, the mobile operator spun off from British Telecommunications last year, follows indications that the Commission will approve a similar agreement between the two companies in Germany.
A final decision will not be taken until a further month of consultations have taken place with the industry but it is extremely rare for Brussels to reverse its initial opinion.
"From a competition law point of view, network sharing reduces competition," said a lawyer close to the issues. "But there is a recognition by the Commission that something has to be done for the mobile industry."
The move, which affects Europe's two biggest telecoms markets, will help end regulatory uncertainty and reduce costs. During 3G auctions across Europe, operators spent more than €100bn on licences but analysts say they are unlikely to recoup much of this. Schroder Salomon Smith Barney, the investment bank, has said that operators would need to generate extra revenues of at least €500 a year from every individual in Europe to justify investments.
Many operators contend they need to pool resources to provide services to clients in the European Union. T-Mobile and MMO believe their deal could save up to 30 per cent of the costs of building 3G infrastructure. T-Mobile said it could save as much as €3bn of the €9bn it is expected to spend on infrastructure by 2010.
Until now, Brussels' response has not been clear. In March last year, the Commission backed a call by Erkki Liikanen, telecommunications commissioner, to encourage network sharing.
But, within a month, Mario Monti, competition commissioner, said approval of network sharing would depend on "the number of operators in a market and the depth of the co-operation". He indicated that there could be competition concerns where co-operation went beyond sharing the masts and base stations that transmit 3G signals.
As the agreements between T-Mobile and MMO go beyond mast and base-station sharing, this latest and more favourable ruling from Brussels spells out more clearly how much co-operation between 3G operators Mr Monti is willing to accept.
"What Monti is trying to do is send a signal to the market that he is helping the mobile industry," said the lawyer.
However, the deals fall short of pooling the companies' entire infrastructure and Mr Monti's staff reserve judgment on a proposal to share radio networks.
Regulators in the UK and Germany have said they favour network sharing, as long as competition concerns are met. |
